Antibipartisanship

[CriticalThought]

Welcome to the America of 2011! Boy oh boy, those midterms of 2010 sure changed things! The Party of No got a whole bunch of new law makers elected by enraged Tea Party folk and became the Party of "Hell No". Now our longstanding credit rating has been downgraded, our economic recovery has actually slowed down to a measly 1%, there is virtually no job growth given that we are cutting more public jobs than creating private jobs, and our government cannot agree on a long term fiscal policy that can pay off our unsustainable debt! Woot!

How proud are you of our progress? How beautiful is it when you elect people whose policy is Antibipartisanship? And for what?

Taxes!

We get to listen to endless rhetoric about unfair tax burdens from the right and income inequality from the left. And where does that leave us? Well...nowhere.

Let's face it. This is class warfare. We have a big bill we are going to have to pay and we are in a big disagreement right now about how to divvy up the check. The problem is the economy does not wait for us to figure it out. The more we bicker about it, the worse our situation is going to get.

But it isn't brain surgery! We know we can't pay off our debt with cuts alone. We know that we need new revenue coming into the federal government. We know that the money simply does not exist in the bottom 47% of the country. So where is it going to have to come from? Whether it is eliminating tax loopholes in the tax system, letting tax cuts expire, or raising taxes outright, the money is going to have to come from the richer half of America.

You want to cut entitlements in a high unemployment market? Fine! Crime will go up, and people will end up in prison, and we will all end up spending more on the increased prison costs than we did on the entitlement costs. Great economic policy!

The fact is, if you want to cut down on entitlements, you have to reduce the income gap so that the tax burden can be spread out. Now how do you suppose you accomplish that task?

 

[stevil]

How proud are you of our progress? How beautiful is it when you elect people whose policy is Antibipartisanship? And for what?

I know this seems really smart and enlightened to you, but the reason that there are two parties is because they disagree on most issues. Hence, to be "probipartisanship" I would have to be for conflicting ideas at the same time now, wouldn't I?

If you want shared sacrifice, then how about taxing the poor so that they can share in the sacrifices that the rich make on April 15th? 40% in this country pay no income tax, and the liberal idea of shared sacrifice is to raise taxes on those who pay 40% of the collected revenue. That's not exactly sharing now, is it?

If you want bipartisanship, fine. But you won't get it by spewing senseless talking points.

 

[RiverDad]

We know we can't pay off our debt with cuts alone.

I was talking to some of my older relatives a while back about what life was like back in the 60s and 70s and they said it wasn't too bad at all.

Here's my proposal: Let's go through the list of federal programs and just cancel every social entitlement program that we instituted since 1960. I'm sure that society wouldn't collapse into a Black Hole. People back then managed to live pretty good lives, so let's reset to a new normal. It's just a matter of recalibrating our expectations.

 

[CriticalThought]

If you want shared sacrifice, then how about taxing the poor so that they can share in the sacrifices that the rich make on April 15th?

This is exactly the uninformed opinion that I have been talking about.

There is no point to taxing the poor because the poor have no wealth and no income. In fact, if you taxed the bottom 47% for half of everything in this world that they own, then you would only get $700 billion.



Wise up. Nobody is stupid enough to think that we can tax the poor. The debate about the "shared sacrifice" is about whether the entitlements to the poor, namely Social Security, Medicare, Medicaid, and Unemployment, should be cut in order to pay our unsustainable debt. To the GOP, that would be preferable to raising taxes on the other half of America that already carried the entire income tax burden.

The problem is if we cut entitlements, then the costs simply shift since crime goes up and we end up paying more for prison costs than we did for the entitlement costs. A good example of this was deinstitutionalization, which lead to the mentally ill being released from state hospitals, ending up on the streets, and then subsequently ending up in mass in our prison system.

What we have to do is broaden the tax burden. The only way we can do that without cutting entitlements is by decreasing the income gap.

Hence, we have to make cuts to entitlements while raising revenue via increasing taxes. It is common sense. You have to do both.

 

[CriticalThought]

I was talking to some of my older relatives a while back about what life was like back in the 60s and 70s and they said it wasn't too bad at all.

Here's my proposal: Let's go through the list of federal programs and just cancel every social entitlement program that we instituted since 1960. I'm sure that society wouldn't collapse into a Black Hole. People back then managed to live pretty good lives, so let's reset to a new normal. It's just a matter of recalibrating our expectations.

I'll agree to this if you agree that we can have the same marginal tax rate that we had in the 60s and 70s. All about recalibrating expectations, right?

 

[RiverDad]

I'll agree to this if you agree that we can have the same marginal tax rate that we had in the 60s and 70s. All about recalibrating expectations, right?

I'll agree to that if we bring back all the deductions that people could claim back then which they can't claim now. Paying for lap dances at lunch and being able to deduct them off your income taxes must have been pretty damn sweet back then.

You do realize that knocking out a whole whack of deductions was part of the tax-cut bargain, don't you? People didn't really pay a 90% top marginal tax rate - no one was that cuckoo-cocoa-puffs. They all picked from a wide assortment of tax deductions to bring their tax obligation down to a rate that was comparable to what we've seen over the last number of decades. Look at this graph. See how high the top marginal tax rate was back in the 60s. Look at the revenue it brought in. There is no big windfall from raising tax rates up to 90%.

 

[RiverDad]

This is exactly the uninformed opinion that I have been talking about.

There is no point to taxing the poor because the poor have no wealth and no income. In fact, if you taxed the bottom 47% for half of everything in this world that they own, then you would only get $700 billion.

Take 10 minutes of your life and watch this video right through to the end. About 3 minutes in he starts an analysis of where we would have to confiscate enough wealth to pay for our current deficit and breaks it down into how many days of government funding each source would cover.

Wise up. Nobody is stupid enough to think that we can tax the poor. The debate about the "shared sacrifice" is about whether the entitlements to the poor, namely Social Security, Medicare, Medicaid, and Unemployment, should be cut in order to pay our unsustainable debt. To the GOP, that would be preferable to raising taxes on the other half of America that already carried the entire income tax burden.

You do realize, don't you, that America already has the most progressive tax system in the OECD? How much progressivity is enough?

 

[CriticalThought]

I'll agree to that if we bring back all the deductions that people could claim back then which they can't claim now. Paying for lap dances at lunch and being able to deduct them off your income taxes must have been pretty damn sweet back then.

You do realize that knocking out a whole whack of deductions was part of the tax-cut bargain, don't you? People didn't really pay a 90% top marginal tax rate - no one was that cuckoo-cocoa-puffs. They all picked from a wide assortment of tax deductions to bring their tax obligation down to a rate that was comparable to what we've seen over the last number of decades. Look at this graph. See how high the top marginal tax rate was back in the 60s. Look at the revenue it brought in. There is no big windfall from raising tax rates up to 90%.

Please try to understand my argument before you try to argue against it.

I agree. There is no major windfall in revenue. All that is typically shifted is the tax burden. And that is the point. My argument wasn't to bring in massive revenue to pay off the debt, it was to shrink the income gap so in the longer term the tax burden would be widened. Cut entitlements and raise taxes. Doing both is the only way to shrink the income gap and then effectively broaden the tax burden.

Basically, I want to throw this trend in reverse....

 

[CriticalThought]

Take 10 minutes of your life and watch this video right through to the end. About 3 minutes in he starts an analysis of where we would have to confiscate enough wealth to pay for our current deficit and breaks it down into how many days of government funding each source would cover.





You do realize, don't you, that America already has the most progressive tax system in the OECD? How much progressivity is enough?

I've seen the video. It has nothing to do with my argument.

Let me try to make this as simple for you as I possibly can.

1. The Income Gap needs to be reduced in order to broaden the tax burden.
2. The only way to reduce the income gap is to both cut entitlements and tax the very wealthiest Americans.

Notice this isn't an argument about repaying the deficit by confiscating wealth, this is an argument about the income gap and the tax burden.

I know you lack some basic reading comprehension skills as is evident from some of our prior debates, but please try to understand my arguments before you try to debate them so I don't have to waste my time making them simple enough for you to understand.

 

[RiverDad]

All that is typically shifted is the tax burden. And that is the point. My argument wasn't to bring in massive revenue to pay off the debt, it was to shrink the income gap so in the longer term the tax burden would be widened.

You do realize that that Bush Tax Cuts, now the Obama Tax Cuts, made the income tax system MORE progressive by lowering the burden on the lowest income groups. If we move backwards through time, say to the Clinton tax regime, income tax progressivity will decline. Go back further in time and it gets worse. We have the most progressive tax system in the OECD. We didn't always.

The problem here isn't tax burden, in my opinion, it's how income is earned. The inequality that bothers people like you occurs in the income generating stage, not the tax paying stage. By the time people owe taxes, the inequality is already a done deal.

You say that you want to shift the tax burden. The bottom 50% or so don't really have any or much income tax obligation at all. If we shift more of the tax burden to the richer citizens then we move the "no-tax" threshold up from, say 50% to 60% of taxpayers. Moving the line up doesn't do anything for the people who are already below the line. Am I conveying this so it makes sense?

You state in your comment that your goal isn't to raise more revenue, it's to shrink the income gap. If you raise the taxes on the rich, and there is no additional revenue that results, then that means that their can't be more spending directed to subsidizing the poor. The people who will benefit are those who are currently paying income taxes and won't as they transition into the no-tax group.

Cut entitlements and raise taxes. Doing both is the only way to shrink the income gap and then effectively broaden the tax burden.

Two points. The first is that when you write broaden the tax burden you're not accurately describing what you want - you don't want to broaden the tax burden, you want to narrow it, if I understand your point, by pushing even more onto the wealthy. A broadening would entail more people, including the rich, to pay more in taxes. The second point is that none of your tax reform proposals will shrink the income gap because the gap is already in place via income earnings, long before the taxes are due. It's like sending out the fire truck to put out a house fire but waiting until the house is burned to the ground. Tax policy can't close the income gap. You need to place your policy intervention into the income earning process somehow.

 

[CriticalThought]

Two points. The first is that when you write broaden the tax burden you're not accurately describing what you want - you don't want to broaden the tax burden, you want to narrow it,

I figured I would have to explain this to you...

I want more people to pay taxes. Instead of only 53% paying taxes, I would prefer if 70% or more were paying taxes.

The problem is we have an income gap. That means that 47% of our country has so little income and wealth that it simply doesn't make any sense to tax them. It would literally do more harm than good.

So in order to get it so that more of those 47% of poorest Americans can pay taxes, we have to shrink the income gap so that they actually have taxable income.

There are two problems to that though which make it difficult. Government entitlements disincentivize a good share of them from seeking greater income and the very wealthiest Americans are taking most the economy's income growth.

So in order to widen the tax burden in the longer term, we have to do something counterintutive. We have to tax the rich more.

Now if that was all that we did, then all it would do would be to narrow the tax burden and it would not accomplish my goal of decreasing the income gap so that the poorest Americans could pay taxes.

The second part is cutting entitlements. That means that many of those 47% of Americans are now incentivized by no longer being able to rely on the government.

As such, the wealthiest Americans are being limited in their ability to accumulate more wealth while at the same time, the poorest Americans are being pushed to increase their incomes. As such, the income gap begins to shrink. More of the poorest Americans begin to pay taxes which takes off tax burden off the other half of America.

It's a shared sacrifice. The richest Americans lose their new income and the poorest Americans lose many of their entitlements. But in the end, everyone benefits because the tax burden will be broadened.

 

[RiverDad]

I figured I would have to explain this to you...

I want more people to pay taxes. Instead of only 53% paying taxes, I would prefer if 70% or more were paying taxes.

The problem is we have an income gap. That means that 47% of our country has so little income and wealth that it simply doesn't make any sense to tax them. It would literally do more harm than good.

So in order to get it so that more of those 47% of poorest Americans can pay taxes, we have to shrink the income gap so that they actually have taxable income.

There are two problems to that though which make it difficult. Government entitlements disincentivize a good share of them from seeking greater income and the very wealthiest Americans are taking most the economy's income growth.

So in order to widen the tax burden in the longer term, we have to do something counterintutive. We have to tax the rich more.

Now if that was all that we did, then all it would do would be to narrow the tax burden and it would not accomplish my goal of decreasing the income gap so that the poorest Americans could pay taxes.

The second part is cutting entitlements. That means that many of those 47% of Americans are now incentivized by no longer being able to rely on the government.

As such, the wealthiest Americans are being limited in their ability to accumulate more wealth while at the same time, the poorest Americans are being pushed to increase their incomes. As such, the income gap begins to shrink. More of the poorest Americans begin to pay taxes which takes off tax burden off the other half of America.

It's a shared sacrifice. The richest Americans lose their new income and the poorest Americans lose many of their entitlements. But in the end, everyone benefits because the tax burden will be broadened.

This is a lot of handwaving. You're assuming way to much and magically just making things happen the way that you want them to happen. So step by step.

#1.) - Your first step is to raise taxes on the rich. OK. We do that. Now what happens? A few things. The first is that income and investment growth slows as a response. This is what happens when we increase taxes on tobacco, we get less purchases of tobacco. The second thing that happens is capital flight increases because investment outside of the US becomes more attractive. The third step is that some wealthy taxpayers decide to permanently leave the US, just like we saw with UK tax exiles when they raised their rates too high. The fourth thing that happens is the economy slows down. The fifth is that the income tax revenues don't move upward, which you've already acknowledged.

At this point we're at a wash - more income tax raised from wealthy, slowed economic growth, increased unemployment, overall same level of taxes raised. You've punished the wealthy by raising their taxes and you do get more revenue. You've punished the middle class by putting more of them out of a job, so you lose their income tax revenue.

#2.) Your second step is to cut entitlements. Which entitlements? You argue that entitlements are creating a disincentive to earn more income and so once these entitlements are cut the incentive to earn more will increase. Which entitlements are you talking about? How high up the income ladder is this disincentive to earn more applicable? This is the part where I think most of your assumptions and handwaving are occurring.

This is where the wheels come off for me. I have no clue what you're actually talking about here.

I think that you're radically misdiagnosing the problem. The problem is simple - the lowest income earners are not earning enough money and the highest income earners are earning a lot of money. This whole game is being played out in the labor and investment marketplaces. It's about marketable skills, not disincentives to earning money. The people who earn a lot of money have skills that others are willing to pay a lot for. The people who don't earn a lot of money either lack skills or their skills can't command that high of a premium in the marketplace. If you want to close the income gap then this is where the solution has to be applied. What exactly are you proposing be done about people who have commodity skills so that they can charge more for those skills? One obvious solution is to create labor market scarcity. The fewer people with those skills, the more these people can charge for their skills. Focusing on taxes is focusing on how to keep the cow in the barn after the cow has already escaped.

 

[stevil]

This is exactly the uninformed opinion that I have been talking about.

There is no point to taxing the poor because the poor have no wealth and no income. In fact, if you taxed the bottom 47% for half of everything in this world that they own, then you would only get $700 billion.

This wasn't my idea. I was simply speaking of "shared sacrifice". You know, I'm a stickler for the actual meaning of words, not whatever the present high-ranking liberal wants to say they mean. That would be actual shared sacrifice, would it not? Instead, "shared sacrifice" means one class sacrifices so Obama can share it with whomever he pleases. Can we agree on this definition? If so, I would think that we both understand that there is already an official term for this philosophy.

 

[CriticalThought]

...

You make a long list of unsubstantiated assumptions about what would happen if the very richest Americans (the top 500 or so) were taxed more...

-income and investment growth slows as a response
-capital flight increases because investment outside of the US becomes more attractive
-wealthy taxpayers decide to permanently leave the US
-the economy slows down

I can't say that I can disprove speculation. I just find it highly unlikely that any of the above would occur. I'm not asking for huge taxes. I'm asking only for enough to cap new income growth on the wealthiest Americans. The rate at which the wealthiest Americans are gaining new income is generally around 7-8% a year. That is the full extent to which I wish to raise taxes.

The fact is our country only produces so much GDP. If the wealthiest Americans are taking 95% of the new income, then there is no conceivable way that no matter what your skill set is, you can close that income gap.

 

[RiverDad]

You make a long list of unsubstantiated assumptions about what would happen if the very richest Americans (the top 500 or so) were taxed more...

-income and investment growth slows as a response
-capital flight increases because investment outside of the US becomes more attractive
-wealthy taxpayers decide to permanently leave the US
-the economy slows down

I can't say that I can disprove speculation. I just find it highly unlikely that any of the above would occur. I'm not asking for huge taxes. I'm asking only for enough to cap new income growth on the wealthiest Americans. The rate at which the wealthiest Americans are gaining new income is generally around 7-8% a year. That is the full extent to which I wish to raise taxes.

The fact is our country only produces so much GDP. If the wealthiest Americans are taking 95% of the new income, then there is no conceivable way that no matter what your skill set is, you can close that income gap.

What happens when you raise the tax on concert tickets? Do more people buy concert tickets? Do less people buy concert tickets?
What happens when you raise the tax on tobacco? Do more people buy cigarettes? Do more people buy smuggled cigarettes? Do fewer people buy cigarettes?

When you raise a tax you get less of the activity that is being taxed.

You're last few sentences show that reality is peeping into your vision for they focus on inequality that develops when the income is earned. You're still pinning your hopes on "fixing" the problem after the fact via taxes, but when you say that you oppose new spending, it's all for naught because your proposal doesn't close the income gap. What you have to do is find a way for poorer people to earn more money.

Yeah, I know, it must be a bummer to have your fantasy popped by reality.

 

[Paschendale]

Can we get a sticky for "why the '47% of people don't pay income tax' is a stupid argument"? I'm so tired of having to explain to people that attempting to tax people who are in poverty isn't really a useful thing to do. They have no money to tax. And, of course, there are many many taxes besides the federal income tax that everyone, regardless of how much money they make, still pays. PLEASE can we drop the stupid argument about poor people being too poor to qualify for federal income tax?

 

[RiverDad]

Can we get a sticky for "why the '47% of people don't pay income tax' is a stupid argument"? I'm so tired of having to explain to people that attempting to tax people who are in poverty isn't really a useful thing to do. They have no money to tax. And, of course, there are many many taxes besides the federal income tax that everyone, regardless of how much money they make, still pays. PLEASE can we drop the stupid argument about poor people being too poor to qualify for federal income tax?

Poor people in the past managed to pay some income tax.

 

[Paschendale]

Poor people in the past managed to pay some income tax.

You wanna show me some stats on that? I'll take most claims at face value, but this one seems at odds with the very nature of a graduated income tax. Do you really mean to suggest that at some point, every single person's income was high enough to qualify? Or that at some point there was no minimum? Really, the use of the word "managed" implies that there was a minimum, and every single person rose above it. I would be very surprised if that ever happened, and I would think that when it ended, whoever was responsible for that happening should be punished severely.

Or are you referring to state income taxes, which many who don't pay federal income tax do still pay? Or the myriad other taxes that they still pay...

 

[jambalaya]

This is exactly the uninformed opinion that I have been talking about.

There is no point to taxing the poor because the poor have no wealth and no income. In fact, if you taxed the bottom 47% for half of everything in this world that they own, then you would only get $700 billion.

View attachment 67115258

Wise up. Nobody is stupid enough to think that we can tax the poor. The debate about the "shared sacrifice" is about whether the entitlements to the poor, namely Social Security, Medicare, Medicaid, and Unemployment, should be cut in order to pay our unsustainable debt. To the GOP, that would be preferable to raising taxes on the other half of America that already carried the entire income tax burden.

The problem is if we cut entitlements, then the costs simply shift since crime goes up and we end up paying more for prison costs than we did for the entitlement costs. A good example of this was deinstitutionalization, which lead to the mentally ill being released from state hospitals, ending up on the streets, and then subsequently ending up in mass in our prison system.

What we have to do is broaden the tax burden. The only way we can do that without cutting entitlements is by decreasing the income gap.
Hence, we have to make cuts to entitlements while raising revenue via increasing taxes. It is common sense. You have to do both.

Agree with what I have put in italics but not what I bolded. I agree that the latter will decrease the income gap because duh, you just took money away from those at the top. Just simple math. But it doesn't necessarily raise anyone else's salary or get them a job. We need to find a way to bring the poor and middle class forward not just simply take some off the top of at the other end of the scale.

 

[CriticalThought]

Agree with what I have put in italics but not what I bolded. I agree that the latter will decrease the income gap because duh, you just took money away from those at the top. Just simple math. But it doesn't necessarily raise anyone else's salary or get them a job. We need to find a way to bring the poor and middle class forward not just simply take some off the top of at the other end of the scale.

The issue is the top is taking all of the economy's new income growth. We aren't going to see a decrease in the income gap until we can find a way to distribute income growth in a fair manner. I do not believe that the wealthiest Americans could obtain 95% of the economy's new income growth on their own merit, and I don't consider whatever methods they are using to be capitalistic. Even a libertarian economist I respect very much pointed out statistically that wealth is being redistributed to the top. That does no occur in a truly capitalistic society.

 

[tessaesque]

This is exactly the uninformed opinion that I have been talking about.

There is no point to taxing the poor because the poor have no wealth and no income. In fact, if you taxed the bottom 47% for half of everything in this world that they own, then you would only get $700 billion.

View attachment 67115258

Wise up. Nobody is stupid enough to think that we can tax the poor. The debate about the "shared sacrifice" is about whether the entitlements to the poor, namely Social Security, Medicare, Medicaid, and Unemployment, should be cut in order to pay our unsustainable debt. To the GOP, that would be preferable to raising taxes on the other half of America that already carried the entire income tax burden.

The problem is if we cut entitlements, then the costs simply shift since crime goes up and we end up paying more for prison costs than we did for the entitlement costs. A good example of this was deinstitutionalization, which lead to the mentally ill being released from state hospitals, ending up on the streets, and then subsequently ending up in mass in our prison system.

What we have to do is broaden the tax burden. The only way we can do that without cutting entitlements is by decreasing the income gap.

Hence, we have to make cuts to entitlements while raising revenue via increasing taxes. It is common sense. You have to do both.

The only one of those is based on an income at or near what is considered "poor". The others are automatic entitlements issued to anybody with a job history.

 

[Gill]

Wise up. Nobody is stupid enough to think that we can tax the poor. The debate about the "shared sacrifice" is about whether the entitlements to the poor, namely Social Security, Medicare, Medicaid, and Unemployment, should be cut in order to pay our unsustainable debt. To the GOP, that would be preferable to raising taxes on the other half of America that already carried the entire income tax burden.

I suggest YOU wise up. Social Security, Medicare, and Unemployment are NOT entitlements for the poor, they are entitlements for everyone. Warren Buffet is just as eligible to receive SS, Medicare, and Unemployment as is the person working at McDonalds for minimum wage. The amounts may differ, but they will both receive their checks.

 

[jambalaya]

I suggest YOU wise up. Social Security, Medicare, and Unemployment are NOT entitlements for the poor, they are entitlements for everyone. Warren Buffet is just as eligible to receive SS, Medicare, and Unemployment as is the person working at McDonalds for minimum wage. The amounts may differ, but they will both receive their checks.

So it is with a lot of entitlement programs. Democrats would have you believe that 47% of the people in this country are now poor. Big B, Big S. The game is to increasingly find entitlements for the middle class and have them slip off into the rolls of the so-called poor. There are many very able bodied people in this country that just want to have their basic needs taken care of so they can put in minimum effort. That is what this class warfare is really about. It is not about the truly needy for whom we have plenty of tax dollars already.

 

[CriticalThought]

There are many very able bodied people in this country that just want to have their basic needs taken care of so they can put in minimum effort. That is what this class warfare is really about. It is not about the truly needy for whom we have plenty of tax dollars already.

There is a lot of truth to this statement. However, it is only half of the reality. Even with entitlements, the reality is that income is being redistributed to the wealthiest Americans. I can't emphasize that enough. Don't get so mired down on one side of the class war that you aren't seeing the other side.

 

[RiverDad]

You wanna show me some stats on that?

No, I don't. That's like asking me to dig up proof that water is wet. This is elementary historical knowledge. The Earned Income Tax Credit is a fairly recent tax gimmick. The Bush Tax Cuts made the tax system more progressive. If we eliminated them, all of them, the tax system would become LESS progressive. This means that people today who pay no income tax would have to pay income tax, just as they did before the Bush Tax Cuts were passed. Go back even earlier and the system was even less progressive.